The announcement for a restart with biogas and biofuel comes amid concerns about the future of the German biogas industry, particularly due to the imminent bankruptcy of a major biogas supplier and other problems within the sector.
Biomass energy originates from plants, including crops like corn and rapeseed, but also from waste and residues from agriculture and forestry. From this organic material, biogas and vegetable oil can be produced.
Between 2004 and 2011 there was significant growth in the use of biomass for electricity generation, partly due to substantial subsidies to kickstart innovative sustainable energy. Many of these local gas companies will soon see their subsidies expire, and there is a strong demand for follow-up subsidies.
A large German biogas company is currently on the brink of bankruptcy due to disappointing sales figures. This company has struggled over recent years to sell its energy at competitive prices, partly due to the recent drop in demand for biofuels.
This drop was mainly caused by fraud involving cheap biodiesel from China. These Chinese companies flooded the European market with cheap biodiesel, which depressed prices in the European Union and severely weakened the competitive position of other producers. This is now being stopped.
The problems in the German energy sector are further complicated by recent discoveries of large-scale subsidy fraud involving counterfeit start-up certificates for biogas plants. This scandal has led to outrage within the industry and raises questions about the effectiveness of the current oversight mechanisms.
A recent survey among German farmers showed that interest in biogas production is declining because it is unclear whether the European subsidy scheme will be extended. In Denmark, biogas production still appears to be promising: two new plants are being built in the rural municipality of Tønder. Austria also seems to be opting for a step forward rather than hitting the emergency brake.
Although Minister Habeck (Greens) is clear in his support for biogas and other forms of bioenergy, he denied rumors that the German government plans to resume subsidies for electricity production from wood-fired plants. Environmental organizations argue that planting trees only to subsequently cut them down to use as fuel for power plants is not sustainable.
Others, such as former EU Commissioner Frans Timmermans, still consider burning wood (pellets) for electricity generation to be more climate-friendly than burning fossil fuels like gas or coal. This is also the EU's position. In the Netherlands, the policy so far has been not to grant new subsidies for biomass, but previously promised subsidies (for the next 10 to 15 years) remain in place.